Music piracy down as labels show first revenue growth since 1999

Global music revenue reaches $16.5B.

Back in 1999, global recorded music revenue was at $38 billion—and it’s been falling ever since.

But that figure is on the rise again for the first time in over a decade. The International Federation of the Phonographic Industry (IFPI) reported Tuesday that its 2012 global recorded music revenue is up 0.3 percent over 2011, reaching $16.5 billion.

Or as the New York Times put it: “Last year, however, digital sales and other new sources of revenue finally grew significantly enough to offset the continuing decline in CD sales.”

Not surprisingly, revenues from legal, digital services continue to rise rapidly—up 9 percent in 2012 over 2011. The IFPI also noted that legal digital music services are available in over 100 countries—just two years ago, download and subscription services were only available in 23 countries.

Industry analysts from the NPD Group also have good news for the RIAA, reporting in the Annual Music Study 2012 that “illegal music file sharing declined significantly in 2012” in the US. According to NPD, the number of consumers using P2P services to download music fell 17 percent in 2012. Similarly, it said that the volume of “illegally downloaded music files from P2P services also declined 26 percent.”

“At the beginning of the digital revolution it was common to say that digital was killing music,” Edgar Berger, chief executive of the international arm of Sony Music Entertainment, told the Times. “The reality is that digital is saving music.”

Correlation is not causation. There are a lot of other factors to consider. Increasing wealth in China, the rise of popular music that gets produced under the creative commons (i.e. dubstep), a generation of music consumers who don't remember 1999, etc.

I can't help but be a bit annoyed that we (we being consumers and the various entrepreneurs that founded Pandora, Spotify and all the other streaming services) dragged the music industry kicking and screaming into the digital age, and now they're all "Eh, you still suck, but we'll take our gajillion dollars - reluctantly. But only because our gold toilets are getting a bit natty."

They've fought every initiative along the way, suing those who pioneered these business models and generally did everything they could to stay in the dark ages, and now they finally advance into the modern age (well, at least a few steps in), and are contentedly reaping the profits.

I know I'm over-personifying the music industry. But dammit, I'm still mad!

I'll admit I used to be a huge music pirate, but I haven't downloaded a single song since Rdio was introduced to Canada. It is way easier to pay $10 and use the streaming service on my phone that works exactly how I want it to than it is to pirate music and put it on my phone.

What people were saying all along is definitely true (we can see that through Netflix and Steam as well, both of which I also use), give us something cheap and simple to use and we will gladly pay rather than pirate. I went from downloading a ton of games to owning over 250 on Steam. Again, make it cheap and make it simple and people will gladly pay.

It was never the fault of digital by itself. A large part of the fault was the fact that the cost for songs during the beginning of the Napster era were far too high. I remember the cheapest songs cost $2.50, and some others, including Sony, were charging as much as $3.25 per song. And those songs could only be played on the computer they were bought through, though sometimes in one mp3 player as well.

Correlation is not causation. There are a lot of other factors to consider. Increasing wealth in China, the rise of popular music that gets produced under the creative commons (i.e. dubstep), a generation of music consumers who don't remember 1999, etc.

No, it's not. But it's curious that in the exact same years that streaming services start booming because the content-owners finally relented and let us pay them millions to listen to the music, their profits start increasing.

Music under the creative commons probably contributes very little to the global revenue, given it's, you know, free.

The most likely explanation is that people finally have the product they wanted all along - unlimited streaming for a reasonable price, at a decent quality.Personally I've spent more money on Spotify than I've spent on music the last decade. The premium subscription comes out to almost 1 CD every month. EVERY month. That's a lot of income.

Incidentally I saw a statistic that streaming services was the largest revenue-stream after iTunes - and that was like 8 months ago.

Agreed with Chris. There's no reason to pirate when a service like Spotify exists. All they need to do is integrate better with my car's headunit and maybe work with Audiosurf and other games via an SDK, and I'm totally in love.

They have been absolutely atrocious about counting digital music sales. At this point they have repeatedly proven they are quite willing to abuse math, and I just can not believe anything they say. Is there any other industry that considers the delivery guy a member of their industry?

Agreed with Chris. There's no reason to pirate when a service like Spotify exists.

And to that point, hopefully TV and movie content providers will realize that allowing users to have unlimited a la carte selection of titles will net larger revenues as more and more consumers move away from standard cable. I've been cable free for about two years now and whenever I go to someone's house who has cable, I immediately remember why I got rid of it.

Through Netflix and Hulu and the internet, I get my media fill without the gigantic overhead that is cable providers for a fraction of the price (seriously like $85 for all three versus $160 for cable and internet and I have faster internet now too).

No one can know how much illegal distribution occurs, so to say it's decreased means about as much as saying earlier "there's a lot" and that it's "hurt" the industry. Failure to create something people are willing to buy is the only thing that hurt the industry.

So you spent several years torrenting MP3s? You hurt no one because you took no value; you weren't going to buy copies of anything anyway, your lossy files never sounded as good as CDs or LPs nor do you particularly value the music and you aren't a collector, as your Internet radio subscriptions prove. (Artists and the industry at large make only tiny percentages there -- you're doing them no real favor actually.)

Record labels spent most of the '80s pushing digital music and had about 10 good years before duplicating it at home became a red herring for why people didn't want to buy it anymore.

I am saddened to say but I see this as bad news. I knew this truth all along -- music was expensive, I had to buy an album when I wanted 1-2 songs, I had to go to the f-ing store located across town... OR I fired up napster.

So why would I see this as bad news? Because when the RIAA goes to pitch how elimination of music piracy works, they will omit the fact that the killer is not stricter control, but rather better distribution.

My first impulse was to gloat and say "we told you so" but I realize, sadly, that most of the music industry probably knew that digital sales could make for and maybe even surpass CD sales but just were too invested in that distribution model to care.Human nature, what a funny thing.

“At the beginning of the digital revolution it was common to say that digital was killing music,” Edgar Berger, chief executive of the international arm of Sony Music Entertainment, told the Times. “The reality is that digital is saving music.”

Hasn't this been what has been said since the beginning of the digital music era? People still want music, probably always will, but they just want it in a way that's convenient for them. Give people what they want, how they want it, and at a price they find reasonable, and guess what? They'll buy it!

Maybe if the record labels had gone with the tide, they'd still be making their 1999-level revenues. But, I suppose that action would've just made too much sense...

Of course, when people went from buying CDs to buying singles, it took awhile for sheer $$ to catch up with previous levels. Translation: That's an awful lot of singles sales they got there. I'm certain of course they still look wistfully at the days when buying a full CD was the only way to get the song or two you wanted.

It's funny though, that the TV and movie industry are where music was 10 years ago. If only they would stop with the obstructive DRM on disc and digital download, and allowed a Spotify-like unlimited streaming service (no, Netflix and Hulu are not this) piracy would drop to near-zero.

I don't know how much piracy actually did to the bottom line, but I know that going digital let me buy the one or two singles from an album at $1.29 each instead of $13.99 for the whole CD... this alone probably accounts for most of the lost in revenue... but what do I know I'm just a music buyer speaking from my own anecdotal experiences...

Spotify is basically Radio V3. Its not the same as owning music and doing what you want with it - for life. The record labels are still going to have to get down to making lossless quality music available for sale ubiquitously. Becuase that's the only thing that will replicate the entire customer offering they had before. Not everyone wants to rent music. And not everyone wants to buy smudged pseudo coples of music (MP3) at the sae price as the real thing.

Its ridiculous that on the one hand the music industry cries about not selling enough CDs (read: WAV files on plastic discs) but on the other hand they refuse to make the very same files available for sale digitally....to the very same customer.....in an age where everything is being sold online where possible.

Also the artists are getting screwed by the labels on royalties for streaming, so they are not exactly waving the flag for it to replace sales of physical discs.

Sorry but this remains entirely a problem of the industry's own making. And a totally unnecessary problem.

I never buy single songs. If the musician isn't capable to put together a more comprehensive album, then I usually lose interest in their singles before I make a purchase. That's just how it plays out, it's not a deliberate decision.

Price is only a small part in what drives people to piracy. Inconvenience of use and access will push many people to yell "shut up and take my money!" until they're red in the face, only to give up and go to the only remotely easy to use option.

Just ask all the people who downloaded pirated game patches in order to be able to run at all the PC games they bought but simply would not run correctly after the DRM denied them access to their legally purchased software. I remember needing one of those to run Doom 3 because the DRM saw my virtual DVD drive and automatically assumed I was going to copy the disc like the filthy software pirate it knew I was.

It's insanity like this that pushes people to piracy. There's only so much security-driven crap that we will tolerate before taking the easy out.

You can start thanking Spotify and the like now. Curbed my piracy almost entirely. Use Spotify to shop and listen whenever @320kbps (better than most purchased mp3's). Buy physical disc for lossless rips if I really like album. I do feel bad for the artist and the streaming revenue gap but it's time for them to start signing intelligently for this day and age. If they sign a crap deal it is their own fault. Most of their lawyers should have figured this out for them.

How about Six Strikes Plan ? Think that might anger enough people to look for Alternatives ? Then again we are talking about the Millions of Clueless Technically Unaware Folk who are the Sheeple or Mass Consumers.Depends on how much Propaganda from MAFIAA Ass they believe.

My first impulse was to gloat and say "we told you so" but I realize, sadly, that most of the music industry probably knew that digital sales could make for and maybe even surpass CD sales but just were too invested in that distribution model to care.Human nature, what a funny thing.

Finally, after over a decade, posting an increase in revenue doesn't make for an "I told you so."

That the decline in revenues stopped at less than half of the level over a decade ago, rather than zero, does not warrant an "I don't you so."

What did you "tell" them? That they'd make a ton less money on digital distribution than physical CDs?

It is good that there seems to be some equilibrium point at which, by offernig the proper service at the proper price, they can "compete with free." And the consumer has, for the most part, won. But acting like you should gloat for "telling them so?" Of course they were too invested in that distribution model to care...that distribution model was producing revenues more than double what they see today.

I do feel bad for the artist and the streaming revenue gap but it's time for them to start signing intelligently for this day and age. If they sign a crap deal it is their own fault. Most of their lawyers should have figured this out for them.

Most of what's on Spotify - or anywhere music is streamed is backlist ie old music. Artists made music years ago and this is their income today and their retirement plan. And the labels are screwing them on it. You cant just tell the artists to go out and get a new deal - the music is already made - the labels are changing the deal.

So basically if you subscribe to streaming music, it can be interpreted as basically supporting legalized piracy - at least from the artists perspective.

Its nice the record labels are making more money but they dont make music - artists do. If anything the labels make to much. Digital medium generally has the effect of disintermediating - not entrenching low-value-added middlemen. And at the moment this is what streaming is doing. Not really in the consumers best interest.

If the labels are not effecting fundamental change on all dimensions in a digital age, they should not be making more money. Shaving a few edges here and there is not enough.

I have started buying my music from Nokia music instead of... getting it from less costly sources, they offer drm free mp3's in 256kbps bitrate for about a euro a song, or 9euros for a album. I find that slightly high, but reasonable.

The first 5 posts really sum up my feelings on this matter. Between Pandora and other streaming options available along with Amazon and iTunes, music has never been easier to listen to or purchase, whether as a digital downloadable file, or on CD. Yes, I still do buy some CDs now and again.

I think it doesn't hurt that the selection (genres/types/whathaveyou) of music has gotten better over the past ten years as well. In my opinion there is a greater variety.

the operative word here is 'show'. if anyone actually believes the heap of bullshit about it being the first revenue growth since 1999, they must be in cloud cuckoo land! all that has happened is that they have SHOWN it this year! they have made substantial profits every year. it has been reported how much they have robbed from their own artists and there have been plenty of law suits against the industries by artists! if they hadn't made any profit for 14 years, do you think they would have carried on? get real!!

I have started buying my music from Nokia music instead of... getting it from less costly sources, they offer drm free mp3's in 256kbps bitrate for about a euro a song, or 9euros for a album. I find that slightly high, but reasonable.

Yeah, I don't feel like music is unreasonably expensive anymore. It's much the same here, with Amazon and iTunes both offering DRM songs are similar bitrates for just over a dollar per song, or around ten bucks for an album.

Compare that to 1999, when it was $15+ for an album, with no option to just buy that one song you liked...and wonder why piracy took off fast.

And it wasn't even that quick or easy back then...people were doing this on dial-up.

The music industry fought like hell to keep sales & profits at those 1999 levels with DRM and lawsuits. After 10+ years of miserable, dogged failure they finally started to see that's impossible.

So they put actual effort behind digital distribution and giving people what they wanted at a decent price and - wow surprise - people actually buy it!

Dislike the headline though. CD sales have likely fallen low enough that they're flattening out - that correction took a long time. Digital sales meanwhile, keep increasing as the record companies get with the program. We've just hit a point where the curves cross. This headline makes it sound like anti-piracy efforts deserve the credit, which they do not.

The first 5 posts really sum up my feelings on this matter. Between Pandora and other streaming options available along with Amazon and iTunes, music has never been easier to listen to or purchase, whether as a digital downloadable file, or on CD. Yes, I still do buy some CDs now and again.

I think it doesn't hurt that the selection (genres/types/whathaveyou) of music has gotten better over the past ten years as well. In my opinion there is a greater variety.

There has always been a wide variety music out there. You just had to actually go look for it. Nothing has changed other than the fact the popular music has gotten even more vapid and mainstream artists are even less talented than before.